Crunching on costs

 Interesting story in this morning’s FT which provides more proof, if proof was needed, that the Aldi effect continues to apply. The piece shows business is booming for run-down stores and older shopping centres as they produce crunch-busting bargains which catch consumers’ eyes.

The booming budget retailers are bucking the high street trend, with many retailers going bust and growing vacancies among many high streets and centres.  Not to mention retail sales values falling 1.8 % on a like-for-like basis in February.

The FT piece mentions companies such as St Modwen, which owns a number of dated shopping centres. They say trading is holding up well across its portfolio. Even shops which have recently become empty have been quickly filled by new tenants and new business.

After the demise of Woolworths, the company says it’s had four stores empty. Three of these have already been re-let to discount retailers such as Poundland and Wilkinsons, which are still looking to expand as consumers tighten their belts.

Business is booming and the boost in trade at high-street discounters has already been well documented.  According to Verdict , the retail research company, numbers regularly visiting discount clothes stores Primark and Peacocks are up on last year, with an even more dramatic increase for food retailers such a Lidl and Aldi. 

“There is definitely trading down going on,” says Tony Shiret, analyst at Credit Suisse, who adds Primark, supermarkets and designer discounter TK Maxx are all doing well. 

 Andy Ward, general manager for Sheffield’s markets, said volumes at the city’s two indoor markets - Castle Market and Crystal  Peaks Market, which offer traditional street market fare, rose 9 % in the year to March 31. 

“[No one] has been made redundant because of the credit crunch,”  Ward told the FT.  “If you went back 20 years to when the steel industry  was collapsing, we have… traders here who used their redundancy money to set up stalls. That may be something we see repeated.”

So finally some good news for our economy: as people’s pockets shrink, bargains have boomed -  And let’s face it. We all love a good deal. 

 

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Cash in on the Aldi effect

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